Why Are Solana's 'Gas' Fees For Transactions So Low?
Transaction fees vary between coins, depending on two key factors: the time required to generate new blocks on the blockchain and the number of transactions that a single block can handle.
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How Much Are Transaction Fees on Solana vs. Ethereum?
Transaction fees in cryptocurrency refer to the charges a user pays when transferring crypto coins from one account to another. Before a transaction can pass or be recorded in the blockchain, it’ll require a certain fee.
Cryptocurrencies generally have three types of transaction fees:
- Network fees
- Wallet fees
- Crypto exchange fees.
Transaction fees vary between coins, depending on two key factors: the time required to generate new blocks on the blockchain and the number of transactions that a single block can handle. Solana has better block time (0.4 seconds) and block size (20,000 transactions) than Ethereum (block time: 13 seconds, block size: 70 transactions).
The higher block time and block size are why the Solana network offers an incredibly low transaction fee of just $0.00025 per transaction. This price makes Solana one of the blockchains with the cheapest transaction fees. In contrast, Ethereum, which is Solana’s primary competitor, currently charges an average transaction fee is between $3-10 in September 2021. This fee can fluctuate dramatically depending on transaction volume across the network, and it is not uncommon to see complaints on social media about gas fees of as much as $50 or $100, even for minor transactions.
With numbers like those, Solana should climb higher than 50,000 TPS without any difficulty. That is about equivalent to what VISA is capable of, according to bitcoin.com.
Solana is rapidly growing in CPU and other technologies and promises to double its scalability every two years. If the network can achieve this, the transaction fees will remain cheap and may even fall since competition for block-space falls.
In contrast, Ethereum has not shown any surprises as the transaction fees skyrocket as use increases. The abysmal nature of the Ethereum blockchain has resulted in intense pressure for block-space. Hopefully, Eth 2.0 will change this narrative.
The new Ethereum version will ultimately expand the Ethereum blockchain to accommodate millions of transactions per second, reducing transaction fees and considerably increasing transaction speed.